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Enron, and on, and on: Enron's Indian troubles: The world's biggest power
trader cannot shake off its Indian headache The Economist, 04/21/01 Hines will add to skyline Houston Chronicle, 04/20/01 EDP in Talks to Buy Brazil's Elektro From Enron, Diario Says Bloomberg, 04/20/01 PORTUGUESE PRESS: EDP In Talks to Buy Brazil's Elektro Dow Jones International News, 04/20/01 INDIA: Enron may sell majority stake in India unit - paper. Reuters English News Service, 04/20/01 INDIA PRESS: Enron May Sell Majority Stake In Dabhol Dow Jones Asian Equities Report, 04/20/01 Enron plans to sell majority stake in Indian power venture Agence France-Presse, 04/20/01 Enron plans to shed majority DPC stake Business Standard, 04/20/01 Gas Diversification: Long-term Contracts are not the Best Polish News Bulletin, 04/20/01 Enron Dumps Romania Venture. The Oil Daily, 04/20/01 Energy Services Firms, Utilities Continue to Log BigQuarterly Earnings. The Oil Daily, 04/20/01 USA: ICE power, gas trading volumes soar. Reuters English News Service, 04/19/01 Enron Renews Efforts to Sell Stake in Indian Unit, Paper Says Bloomberg, 04/19/01 Business Enron, and on, and on: Enron's Indian troubles: The world's biggest power trader cannot shake off its Indian headache 04/21/2001 The Economist Copyright (C) 2001 The Economist; Source: World Reporter (TM) - FT McCarthy IT IS the world's largest trader of energy, and this week it announced a glowing set of first-quarter results, with revenue quadrupling and profits up 20%. But Texas-based Enron Corp cannot seem to shake off its Indian headache. For the umpteenth time in six years, it has become locked in a dispute over its power project at Dabhol, in the Indian state of Maharashtra. And again, the dispute is with its sole customer, the Maharashtra State Electricity Board (MSEB). A government-committee report published on April 12th recommends renegotiation of the project to reduce the price of its electricity, even though this has already been renegotiated once, in 1996, shortly after construction work started. To "protect its rights", Enron has started arbitration proceedings against the authorities and has issued a "political force majeure" notice against the MSEB. Perhaps most important of all, Enron has asked the finance ministry to honour a financial guarantee that the ministry provided for the project, in order to recoup $47m that the MSEB failed to pay for power in December and January. The MSEB has lodged an $86m counter-claim against Enron for failing to build up generation to full load quickly enough on one day in January. Suspicions that the MSEB is trying to avoid paying its dues prompted Richard Celeste, America's ambassador to India, to suggest that Maharashtra was "taking refuge behind legalities". The mood is not yet calm enough to negotiate a way out - although there is some talk of the state or a private investor buying out Enron, which is losing interest in owning power plants in poor countries. Enron's force majeure notice as good as accuses the state government of slowing the project for political reasons. Enron says that it is willing to discuss the report, but that there is no basis for proper talks until Maharashtra restructures the MSEB's parlous finances and thus gives the project a chance of surviving its planned 20-year life without further crises. Government officials are repeating accusations thrown around in the mid-1990s that Enron is behaving arrogantly. But India too has much to lose. Suresh Prabhu, India's power minister, insists that the dispute does not reflect any "anti-foreign-investment attitudes". However, if it is not resolved soon, it could do further harm to India's already blighted image as a destination for foreign direct investment (FDI). India has long hoped to attract up to $10 billion of FDI a year, but it peaked in 1997-98 at $3.6 billion and last year was down to $2.1 billion. That compares dismally with other Asian countries. The shortfall is due mainly to India's failure to turn large infrastructure proposals into actual projects. Plans for power and oil-refining projects with nearly $20 billion of FDI have been approved in the past decade, for instance, but only $1.6 billion has actually been invested - and a large amount of that went to Dabhol. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. April 20, 2001 Houston Chronicle Hines will add to skyline 32-story tower to be downtown near Jones Hall By RALPH BIVINS Copyright 2001 Houston Chronicle The Hines real estate development firm is preparing to make another mark on the downtown Houston skyline with the creation of a 32-story office tower. Hines will begin construction in July on Texas Avenue near Jones Hall, the Alley Theater, Chase Tower and the Houston Chronicle building. Over the last 30 years, Hines has developed a number of major buildings downtown. "We are tremendously excited to add our 10th signature building to the downtown Houston skyline," said Charlie Baughn, executive president of Hines. The 689,000-square-foot building will be named after the main tenant, the Calpine Corp., a San Jose, Calif., company that produces electricity. Calpine has agreed to lease 300,000 square feet. It has not been determined whether the building will be christened Calpine Plaza, Calpine Center or some other variation on the Calpine name. The tower is scheduled to be complete in the fourth quarter of 2003. A parking garage on the block will be torn down, but the historic Lancaster Hotel, the Longhorn Cafe and Clive's restaurant will be retained. The building will cover about three-fourths of the block, said Larry Margolis, project manager for Hines. Houston-based Hines is developing the building in partnership with Prime Asset Management, which also owns the nearby 75-story Chase Tower. Prime Asset is led by Lebanese billionaire Rafik Hariri. Shaped like an oval with a flattened side, the tower will be wrapped in an exterior of rose-tinted granite with bluish windows. A granite-paved pedestrian plaza will be built at the corner of Texas and Milam, leading into the entrance at 717 Texas Ave. The project is designed by Hellmuth, Obata & Kassabaum, the architecture firm that did Enron Field for the Houston Astros. Seven levels will be devoted to an enclosed parking garage with 900 spaces. Above the parking garage will be 24 floors of office space, with about 26,500 square feet of space per floor. Calpine will be moving about 1,100 employees into the building. The company now has its workers in three downtown buildings: Bank of America Tower, Wells Fargo Plaza and Pennzoil Place. Calpine's choices for office space in downtown Houston were slim. The prime "Class A" space in downtown is more than 96 percent occupied, and large blocks of top-quality vacant space are nonexistent. The downtown office market has made a comeback from the 1980s, when more than one-third of its office space was vacant. For more than a decade after the Texaco Heritage Plaza was completed in 1986, downtown had no new buildings. And no new space was needed. With no new construction, the vacancy numbers turned around. At the end of 1993, the overall downtown vacancy rate was 22.43 percent. By the end of this year's first quarter, downtown vacancy had fallen to 6.3 percent, according to the CB Richard Ellis realty firm, and rental rates are climbing. The Calpine building will join other significant downtown towers under construction: ? The 36-story Century Development tower at 1000 Main, near Foley's. It will have 783,000 square feet of office space and 50,000-square feet of retail space. Reliant Resources will be the primary tenant. The Gensler architecture firm designed the building, which is to open in early 2003. ? Crescent Real Estate Equities is developing the 5 Houston Center building, a 27-story project on the block bounded by McKinney, Austin, LaBranch and Walker. Ernst & Young has leased 127,000 square feet in the 570,000-square-foot building, scheduled to open in 2002. HKS Architects designed it. ? Enron Center South, a 40-story tower under construction at the corner of Smith and Bell. Cesar Pelli & Associates designed the 1.2 million-square-foot building. The first tenants will move into Enron Center South this year, and the building will be complete in 2002. Hines is the developer. Hines has been a key player in shaping the downtown skyline. The firm began with the development of One Shell Plaza in 1971. It later added Two Shell Plaza, Pennzoil Place, 700 Rusk, 1100 Louisiana, Chase Tower, the Wortham Theater Center and Bank of America Center, which formerly was known as RepublicBank Center. With the Calpine building, Hines is, in effect, giving its endorsement to the north part of downtown, said Derrell Curry of CB Richard Ellis. "You're running out of land in downtown. You have to go somewhere," Curry said. "You don't see Hines building in unproven sites very often. If they aren't comfortable with it, they don't build on it." EDP in Talks to Buy Brazil's Elektro From Enron, Diario Says 2001-04-20 04:55 (New York) Lisbon, April 20 (Bloomberg) -- EDP-Electricidade de Portugal SA, the country's biggest electricity company, is in talks with Enron Corp to buy a stake in a Brazilian unit of the world's largest energy trader, Diario Economico said, citing no sources. The talks have dragged on for several months over disagreements about the price of Elektro-Eletricidade e Servicos SA, as the unit is called, the newspaper added, without citing its sources. The Brazilian purchase would fit into EDP's strategy of expanding in Brazil and Spain as it shores up its business before losing its monopoly at home. Elektro would add size to Empresa Bandeirantes de Energia SA, an electricity distributor EDP and a local partner bought three years ago and now plan to split. Other companies considering Elektro include Spain's Endesa SA, Spain's largest utility, Diario Economico said. PORTUGUESE PRESS: EDP In Talks to Buy Brazil's Elektro 04/20/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) LISBON -(Dow Jones)- Utility Electricidade de Portugal SA (EDP) is in talks with the U.S.'s Enron (ENE) to buy Brazilian electricity distributor Elektro Eletricidade e Servico SA (E.EKO), Diario Economico reports. Elektro is valued at EUR1.56 billion, but, according to analysts, EDP's offer stands at EUR878 million. Newspaper Web site: http://www.de.iol.pt Lisbon Bureau, Dow Jones Newswires; 351-21-319-1863 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: Enron may sell majority stake in India unit - paper. 04/20/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, April 20 (Reuters) - U.S. energy giant Enron Corp plans to sell a major share in Dabhol Power Company, its controversy-ridden power project in the western Indian state of Maharashtra, a business daily said on Friday. The Economic Times newspaper said leading investment bankers were making presentations to Enron for the mandate to sell its stake in the $3 billion venture. Enron could not be immediately reached for comment. The 2,184 MW power project has four equity partners - Houston-based Enron with 65 percent, U.S. giants General Electric and Bechtel with 10 percent each, and Indian utility Maharashtra State Electricity Board (MSEB) with 15 percent. Under the original project plan finalised four years ago, MSEB's stake was to increase to 30 percent, and Enron's to fall to 50 percent, through additional investment by the state electricity board to finance construction of the second phase of the project. But faced with financial problems, MSEB informed Enron last year that it would be unable to buy the additional 15 percent, leaving Enron to scout around for another buyer. Enron said in January it plans to sell the 15 percent stake. But a payment row with the MSEB and growing political opposition to Enron's expensive power project has raised speculations that the U.S. energy giant may pull out of the project. The Economic Times, quoting unnamed sources, said Enron will require an approval from its lenders if it wants to pull out of DPC. Enron may seek this approval at its lenders meet in London on April 23, it said. The MSEB has been defaulting on payments since October for electricity purchased from Dabhol's 740 MW power plant on the state's west coast. The amount outstanding totals 2.26 billion rupees ($48.24 million). ($1 = 46.84 Indian Rupees). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA PRESS: Enron May Sell Majority Stake In Dabhol 04/20/2001 Dow Jones Asian Equities Report (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- U.S. energy company Enron Corp. (ENE) is reported to be in the process of appointing a merchant bank to sell a majority stake in India's $3 billion Dabhol Power Co., reports the Economic Times Friday. Enron is expected to select a bank within a few days. Enron holds 65% stake in Dabhol Power, while Maharashtra State Electricity Board holds 15% and U.S. companies Bechtel Group Inc. and General Electric Co. (GE) each hold 10%. Enron officials declined to comment, the newspaper said. Newspaper Web Site: http://www.economictimes.com -By New Delhi Bureau, Dow Jones Newswires; 91-11-461-9427; sonal.singh@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron plans to sell majority stake in Indian power venture 04/20/2001 Agence France-Presse (Copyright 2001) BOMBAY, April 20 (AFP) - US-based energy company Enron Power Corp is putting in place plans to sell its majority stake in the troubled Dabhol Power Co. in western India, reports said Friday. "Enron is believed to be in the process of appointing a merchant banker to sell its majority stake in the Dabhol Power Co (DPC)," The Economic Times said, quoting unnamed sources. Leading investment banks are currently making presentations to Enron to win the mandate, which is expected to be awarded in a few days. "Enron will always consider a legitimate proposal to sell an asset if it makes strategic sense, but we are not currently selling our stake in DPC," an Enron spokesman told AFP. Enron holds about 65 percent of DPC, the Maharashtra State Electricity Board (MSEB) has 15 percent and two other US companies hold 10 percent each. Enron is putting up a three-billion-dollar, 2,184 megawatts power station in the port town of Dabhol, some 200 kilometres south of here. The project was signed in 1993 and construction began a year later. It was scrapped in 1995 by Maharashtra state's Hindu nationalist government which had just been voted to power. Opponents of the project had by then built up a campaign, accusing Enron of bribing local politicians and officials to win the contract. The Hindu nationalists re-negotiated the power purchase agreement and phase one, generating 714 megawatts of power, began operating in 1999. In 2000, MSEB began defaulting on payments forcing Enron to invoke government counter-guarantees in January 2001. The Hindu nationalists were replaced by a Congress-party led government which said the cost of Enron's power was "unaffordable". The government set up a panel to review the project. The panel, early this month, said the power project agreement should be renegotiated. man/gh/lh Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron plans to shed majority DPC stake Baburajan K & Arijit De MUMBAI 04/20/2001 Business Standard 1 Copyright © Business Standard Enron, the Houston-based embattled power transnational, is finally planning to divest its stake in Dabhol Power Company (DPC). Leading investment bankers in Mumbai, on conditions of anonymity, told Business Standard that Enron had sounded them out on finding a buyer for its stake in DPC. An agreement with the lenders to DPC, however, bars Enron from selling its entire 65 per cent equity stake at this stage. Enron will have to continue retaining a 26 per cent stake till all the $2.1 billion in loans for the project are repaid over a 15-year period. Enron officials in Mumbai declined to comment on the matter. However, the Financial Times reported on Wednesday that Enron chief executive Jeff Skilling in an interview said that the company "would be interested in talking to potential buyers" for its $900 million interest in the Dabhol project. DPC is the largest greenfield project in India. Only the first 740 mw phase of the $3-billion, 2,184-mw power project is running now. The second phase is scheduled to go on stream in December 2001. Enron, which was to hold only 50 per cent of the project's equity, now has a 65 per cent stake as the cash-strapped Maharashtra State Electricity Board (MSEB) did not pick up all the equity it had committed to buying. General Electric and Bechtel hold 10 per cent each, while MSEB has a 15 per cent stake. Enron last year appointed Credit Suisse First Boston to find a buyer for the additional 15 per cent stake, but no buyer was found. The divestment of equity will virtually complete Enron's exit from India. Five years ago, the power company announced its intention to invest $10 billion in India. Enron's projects then included a string of power plants, a 5-million-tonne LNG project, an LNG pipeline from West Asia to India, besides an optic fibre broadband network in Maharashtra. Its oil and gas subsidiary recently announced its exit from all the oil blocks it had an interest in. The future of MetGas, the LNG terminal project which was to supply a large chunk to Dabhol phase II, remains unclear. Though DPC officials have denied this, work on MetGas too, after the initial construction work, seems to have been put on the backburner. Industry sources argue that, given the controversy over DPC's high price for power and the state government's insistence on renegotiating the power purchase agreement (PPA), Enron may find it difficult to get a buyer. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Gas Diversification: Long-term Contracts are not the Best 04/20/2001 Polish News Bulletin Copyright (C) 2001 Polish News Bulletin of the British and American Embassies; Source: World Reporter (TM) No longer being only a consumer of gas, Poland will increasingly become a transit country, which will greatly increase the security of supplies. The construction of the second line of the Russia-Europe pipeline through Poland's territory has to a large extent been already decided. It is also necessary to create stronger direct links between Poland's gas transit system and EU systems to ensure better access to the EU's physical and financial short- and medium-term futures market, wrote Jarek Astramowicz, chief executive of Enron Poland, a subsidiary of the US energy group, in a recent issue of Rzeczpospolita. The plans of extending the existing inter-system links and creating new ones make it possible to give a more balanced assessment of the optimal level of long-term direct gas supplies, and the level of diversification of supplies ensuring the country's energy security. Only the execution of these plans will make it possible to satisfy Poland's demand for gas in the most flexible, diversified and cheapest way. On the other hand, new, rigid long-term contracts for the direct supply of gas from other sources (such as those negotiated now by PGNiG with Norway's GFU and Denmark's DONG) will not ensure even the lowest level of flexibility - and that is necessary because the actual level of future demand for gas remains unclear. Long-term contracts are the most expensive way of satisfying gas demand, something that Poland cannot afford. A solution in which Poland buys from different directions and from many suppliers also enables the buyer to achieve a stronger negotiating position, wrote Astramowicz. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron Dumps Romania Venture. 04/20/2001 The Oil Daily © 2001 Energy Intelligence Group. All rights reserved. Enron Capital BV, a unit of energy group Enron, has given up a marketing deal with Romania's state oil company SNP Petrom by assigning its stake in a gas joint venture to SNP, officials said Thursday. Enron agreed to freely transfer its 50% stake to SNP, SNP's Gabriel Nastase said. Enron left the venture after it was unable to handle gas imports for SNP as planned. Petrom-Enron Gas SRL was created in 1998 as a 10-year joint venture, with the two firms each owning 50%. Nastase said Enron had complained that it could not get access to Romania's national gas transport pipelines to handle the planned imports. He said SNP is seeking a new partner to replace Enron in the venture, but gave no other details. © Copyright 2001. The Oil Daily Co. For more infomation, call 800-999-2718 (in U.S.) or 202-662-0700 (outside U.S.). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Energy Services Firms, Utilities Continue to Log BigQuarterly Earnings. 04/20/2001 The Oil Daily © 2001 Energy Intelligence Group. All rights reserved. Integrated utilities and midstream natural gas/energy services companies are doing quite well with or without large trading and marketing operations. Duke Energy, Kinder Morgan Inc. (KMI), and Kinder Morgan Energy Partners (KMP) continued the earnings growth trend established earlier this week by Dynegy, Enron, and Reliant Energy, coming in with double-digit increases in profits (OD April18,p5). - Duke: Recurring earnings climbed 50% to $550 million (73?/share) on revenues of $16.5 billion from recurring earnings of $388 million (53?/share) on revenues of $7.3 billion a year ago. Earnings applicable to common shares were $454 million (60?/share), up from $388 million. Earnings from regulated electric utility and interstate natural gas pipeline operations still exceed those of unregulated field services, trading and marketing, and international ventures, but the growth in both profits and revenues clearing is coming from the latter sectors. Wholesale electricity volumes exceeded 56.9 million megawatt hours, up from 50.4 million MWh. Marketed natural gas, including wholesale and field services volumes, rose to 15.2 billion cubic feet per day from 12.5 Bcf/d. Duke is a major independent electricity supplier to California. The company said it has managed the level of questionable receivables from buyers there to a lower level and has not added to the $110 million reserve previously established against potential bad debts. - KMI: An asset transfer to affiliate KMP held KMI's earnings increase to a relatively modest 15% and also reduced revenues. Recurring income was $56.8 million (47?/share) on revenues of $347.5 million, compared with earnings of $46.3 million (41?/share) on revenues of $480 million a year ago. Earnings applicable to common shares for the first quarter of 2001 were $44.7 million (37?/share), reflecting a charge for the early extinguishment of high-interest debt. Chairman and Chief Executive Rich Kinder said the company is on track for 50%-60% growth in second-quarter results. Increased cash distributions from KMP and continued expansion of KMI's electricity business are behind the improved outlook. KMP: Acquisition of Kinder Morgan Texas Pipeline from KMI, full ownership of the carbon dioxide business, and improvements in the products pipeline sector were the major contributors to a 71% jump in first quarter-results, but all business lines reported better performance. The pipeline limited partnership had net income of $101.2 million (89?/share) on revenues of $1 billion, dramatically higher than the year-ago earnings of $59.6 million (63?/share) on revenues of $157.4 million. Barbara Shook. © Copyright 2001. The Oil Daily Co. For more infomation, call 800-999-2718 (in U.S.) or 202-662-0700 (outside U.S.). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. USA: ICE power, gas trading volumes soar. 04/19/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, April 19 (Reuters) - IntercontinentalExchange (ICE) continues to enjoy rocketing volumes in power and natural gas trading on its Internet-based platform, but activity in options and oil products is falling, the company said Thursday. In addition, growth in crude oil and precious metals trading volumes has levelled off in the past month, said ICE, which is in merger talks with London's International Petroleum Exchange (IPE). ICE hosts 'over the counter' (OTC) trading - trading done outside regular exchanges - of derivatives in crude and refined oil products, natural gas, power and metals. Power volumes have risen from about 0.4 million megawatt hours (Mwh) per day in December to 2.8 million Mwh per day in April. The most liquid hub is Cinergy, with almost 11 million Mwh traded last week, according to a newsletter published on the ICE Web site. After hovering at dismal levels between December and February, natural gas trading also shot up on ICE, reaching almost 60 million MMBtu per day in April, the exchange's data showed. Options trading ran the opposite course, peaking in late February at above $20 million in daily notional trading and then slumping to about $10 million a day in April. The most traded were Brent crude options, which approached 3 million barrels last week. Oil products trading is also off its heyday. After more than doubling between December and February to about 2 million barrels per day (bpd), trading eased off to around 1.5 million bpd. The most traded products are gasoline and fuel oil swaps, as well as gasoline and gasoil/heating oil cracks. Crude oil volumes on ICE were mostly stagnant at about 3.5 million bpd during the last month after rising from less than 2 million bpd late last year. The most active products were crude grade differentials, trading more than 11 million barrels last week. Precious metals trading also leveled off in the past month at around 275 million ounces per day. The most traded last week was sliver, with more than 5 million ounces. At the end of March, ICE total notional volume reached $70 billion since its inception last year. That is an average of about $350 million, a tenth of that of EnronOnline, where Enron is on one side of every transaction. Last month, ICE set new records of 19 million barrels of oil, 97 billion cubic feet of natural gas and 4.6 million megawatt hours of power for daily trading on its system. On the New York Mercantile Exchange, trading regularly exceeds 400 million barrels of crude in a day. Oil majors BP Amoco , Royal Dutch/Shell and TotalFinaElf joined international banks to establish ICE last year, with several U.S. power companies joining the consortium later in 2000. ICE has put in a $65 million share-swap bid for IPE to better position itself for competition with enymex, the Internet exchange the New York Mercantile Exchange (NYMEX) will launch in the second quarter, according to reports. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron Renews Efforts to Sell Stake in Indian Unit, Paper Says 2001-04-19 23:07 (New York) Mumbai, April 20 (Bloomberg) -- Enron Corp., the world's largest energy trader, has renewed efforts to sell part of its stake in its Indian unit, the Business Standard reported, citing investment banking sources it didn't name. Enron, which owns 65 percent of Dabhol Power Co., has been embroiled in a dispute with Maharashtra state over the cost of its power and non-payment of bills. The Maharashtra State Electricity Board, Dabhol's only customer, hasn't paid 3 billion rupees ($65 million) for power generated by Dhabol, the paper said. Enron's, $3 billion, 740 megawatt-a-year project, is the biggest foreign investment in India. The project faced numerous delays and at one point was canceled after a change of state government. Enron revived it after agreeing to cut power prices by 22 percent and sell a 30 percent stake to the state. Enron last year named Credit Suisse First Boston Inc. to try to find a buyer for 15 percent of Dabhol, but was unsuccessful.
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